Professional Negligence Solicitor, Lee Dawkins anticipates the publication of the FSA’s report on the interest rate swap debacle
The FSA is due to release a report this week on its investigations into the Interest Rate Swap scandal.
Last year, the FSA ordered Barclays Bank, RBS, Lloyds TSB and HSBC to commence a review of their procedures into the selling of Interest Rate Swaps, such investigations then being extended to an additional seven banks.
Those procedures have now been reviewed by the FSA to determine whether the complaint handling is, in its view, adequate. If it is, then the FSA is likely to order a full review of what it considers to be ‘non-sophisticated customers’, a case review which could mean an examination of anything up to 40,000 cases.
If the FSA finds that the measures are insufficient, it could mean the banks are sent back to the drawing board to review their methods which could mean further delays for the smaller customer. This is particularly worrying given that many small customers could be facing their litigation limitation period of six years; if they exceed this limitation period, they will not be able to obtain redress through the courts.
It would appear though that the main cause for concern for the banks is the definition of ‘non-sophisticated customer’. At the moment, the FSA has defined a NSC as a firm “with fewer than 50 employees, less than £3m in assets and less than £6.3m in annual turnover”. This will sweep up many small firms that have been affected by the IRS scandal. However, what the banks are concerned about is that “this could open the floodgates to claims from subsidiaries of listed companies and ‘special purpose vehicles’”, ie small companies that have been set up to hive off the loans from their larger parent companies in order to protect it. If this is the case, then the banks will be inundated with claims causing further delay for the genuine small businesses that have been affected by the scandal.
We will update you on developments and let you know when the awaited FSA report has been published. In the meantime anyone wishing to make an interest rate swap claim should call us on 0808 139 1595 or email us for FREE initial guidance.